Closer trade ties with Asia seen as no threat to U.S.

Tuesday, April 2, 2013

By Gordon Hamilton, Vancouver Sun

U.S. Ambassador David Jacobson says that for every dollar that Canada exports, the U.S. gets a quarter, adding the other 75 cents ‘is there to buy stuff in the new Target stores that are opening, and to buy iPods. And the same applies in the other direction.’ Target plans to open 124 stores in Canada.

Photographed by:Dave Chidley, THE CANADIAN PRESS

Stronger Canadian trade links with Asia are no threat to Canada’s largest trading partner, the United States, U.S. Ambassador David Jacobson said Tuesday.

If it’s good for Canada to diversify its trade offshore, then it’s also good for the U.S., Jacobson said in an interview in Vancouver. The U.S. ambassador is in the city to attend the annual Pacific Energy Summit on the potential for deepening energy ties between Asia and North America.

“We expect that Canada will sell its goods and services and natural resources where the markets need them, and that if Canada prospers as a result of that, then the United States will be one of the beneficiaries,” said the ambassador.

“As Canada increases its export markets, that’s good for the United States. One of my favourite statistics is that 25 cents of every dollar that Canada exports is U.S. content. For every dollar you export, we get a quarter. And the other 75 cents? It’s there for trade between United States and Canada. It’s there to buy stuff in the new Target stores that are opening, and to buy iPods. And the same applies in the other direction.”

Jacobson also said that the Canadian focus on building liquefied natural gas facilities in B.C. for Asian markets is not so much a race between the two countries, as a competition based on economics. The region that does it better will benefit, he said.

“The thing that makes us both strong is that we compete, for the most part, based on the economics of the situation, not on trade restrictions. If Canada succeeds or the United States succeeds in any particular transaction it’s because they do it better, they do it cheaper, they do it more expeditiously.

“As long as the competition is fair, we are prepared to let the chips fall as they may.”

However, Jacobson said that despite the growth of trade between Canada and Asia, it is dwarfed by the trade between Canada and the U.S., where everything from markets to integrated supply chains facilitate the free movement of goods and services. The U.S. economy is rebounding, he said, and Canada will benefit as a result.

“Last year, exports from Canada to the United States grew by $41 billion. Exports from Canada to China grew by $4 billion. I think that puts the economic relationship between our two countries in perspective,” he said. “It is the largest trading relationship between two countries in the world. We have incredibly integrated supply chains. We don’t just sell things from one to another; we make things together. It is one of the great economic successes between two countries.”

Jacobson, who has been ambassador to Canada since 2009, has made expanding bilateral trade between the two countries one of his prime objectives, along with improving border security and efficiency. He also believes in striking a balance between utilizing Canadian energy resources and environmental protection.

However, he offered no opinion on how one of the hottest energy-versus the environment battles — the Keystone XL pipeline proposal to transport bitumen from the Alberta oilsands to the U.S. Gulf Coast — will unfold.

“It will not surprise you if I tell you that I am not going to jump the gun on the President of the United States. There is a process with respect to the pipeline, and we are going to respect that process.”

Jacobson said the dramatic growth of natural gas reserves in North America over the last five years has “huge implications” for not only energy exports but also the environment, the economy and geo-politics. Innovations in unlocking gas and oil from shale formations have changed America’s energy future. As those reserves are developed, the U.S. is expected to overtake Russia as the world’s largest gas producer by 2015, and Saudi Arabia as the world’s largest oil producer by 2017, according to projections by the International Energy Agency.

“It is one of the most important things that has happened in North America in quite some time. As we become more self-sufficient with respect to energy, we are going to have to import less, and eventually none, from some of the least stable places in the world. That’s good. It is going to have significant impact on the on-shoring of manufacturing as we become the place with the lowest, or one of the lowest, energy costs anywhere in the world. That is an enormous competitive advantage in the United States and Canada. It is one of those things that is going to have a huge impact across the board in ways that I think we are going to have to watch play out in front of us over the next few years.”

Already, lower natural gas prices in the U.S. are attracting European manufacturers. German chemicals manufacturer BASF has pumped $5.7 billion into new investments in the U.S. since 2009.